Credit is a funny thing. Many of us don’t even consider our credit scores until we need to take out a personal or business loan. Only then do we understand the implications of our credit score on buying a home, getting a car, or starting our dream business.
Do small business startup loans with no credit checks exist? The short answer is no for traditional financing. There are a few lenders, like Fundbox, that offer invoice financing with no credit check. However, this wouldn’t be an option if you’re just starting up (obviously, you need invoices to pursue this kind of financing).
Why Are You Looking for a Loan With No Credit Check?
If you’re worried about dinging your credit, there are some lenders that just do a soft credit pull—meaning it won’t affect your credit score.
If you’re afraid you have “bad credit,” make sure you understand the FICO score ranges before deciding that no lender would want to work with you. You might be underestimating your credit score or your loan options.
Either way, if you’re looking for a small business startup loan with no credit check, or if you have bad credit or no credit history, there are plenty of financing options for you to consider.
5 Types of Small Business Startup Loans With No Credit Checks
In recent years, crowdfunding has become a popular option for entrepreneurs looking to launch a new product or service. It lets you tap into the collective efforts of friends, family members, customers, and individual investors to raise the capital you need to start your business.
Crowdfunding platforms like Indiegogo, Kickstarter, and GoFundMe make it easy for you to host an online campaign and reach potential backers through email and social media. Plus, there’s the added benefit of validating and refining your business concept through feedback from the masses.
There are a few types of crowdfunding to consider when you’re planning a campaign for your business.
Types of Crowdfunding
- Donation-based crowdfunding is when there is no incentive for the backers—this is typically reserved for nonprofits, disaster relief, community projects, or medical bills/funeral expenses.
- Rewards-based crowdfunding offers backers a reward for contributing to your business—typically in the form of a product or service that your company offers, or a special gift or experience to thank you.
- Equity-based or securities crowdfunding allows backers to become part-owners of your company by trading capital for equity shares. This means that they receive a financial return on their investment in your company.
Small business grants are awesome because, unlike small business loans, you don’t need to worry about paying them back. You just need to qualify—which can be hard to do. Federal, state, and local governments offer a wide range of grants to help small businesses start and develop. The catch is that they are typically reserved for specific industries and causes that have been identified by the government, such as scientific or medical research or conservation efforts.
3. Microloans and nonprofits
If you’re a minority small business owner or come from a disadvantaged background with poor or no credit history, you might qualify for a microloan or assistance from a nonprofit. These lenders aren’t out for their financial benefit—they want to help traditionally marginalized groups and strengthen struggling communities.
4. Friends and family
When all else fails, you can always go to the Bank of Mom and Dad. In all seriousness, if your family and friends believe in you and your businesses and are willing to invest in the future of the company, they might be a great resource. But be careful. If you accept money from your friends or family, you inherently put them at risk. Make sure that they are fully aware of the risks and have a strong understanding of what you plan to do with their loan or donation.
5. Business Credit Cards
If the real issue is that you have poor credit or no credit history and you’re afraid you won’t be eligible for a more traditional small business startup loan, you might want to look into getting a business credit card.
Below are a few of the best options if you have no personal credit history or challenged personal credit.
- The OpenSky Secured Visa Credit Card does not require a credit check or checking account to qualify. It reports monthly to all three national credit bureaus to help you establish or build your credit fast. The annual fee is $35 and the variable APR range is 18.14%. You can choose a credit line as low as $200 up to $3,000, secured by a fully refundable security deposit.
- Applied Bank’s Secured Visa Gold Preferred Credit Card has no minimum credit score and does not require a credit check. It also reports to all three major credit bureaus to help you build your credit and has a super-low fixed APR of just 9.99% with an annual fee of just $48. And guess what? Your rate won’t go up even if your payments are late. You can activate it quickly with a minimum deposit of just $200 and a max of $1,000, and you can increase your credit limit up to $5,000 by adding additional deposits at any time.
- The Primor Secured Visa Gold Card offers guaranteed approval as long as your monthly income exceeds your monthly expenses by $100 or more. This card also reports to all three major credit bureaus to help you build your credit and has no processing or penalty fees. Credit lines from $200-$5,000 are available.
So, do small business startup loans with no credit checks exist? Not in the traditional sense. But with a little bit of creativity, you can come up with the capital you need to start your business.
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from Fundera Ledger https://www.fundera.com/blog/small-business-startup-loans-no-credit-check